[cppene]

Remain bearish on the USD and believe that the USD-Index will continue its trend to lower levels in the months ahead while the EURUSD will continue higher to new trend highs over the same period. However, the present chart of the USD-Index draws attention to a few things.

To be specific it is suggesting the possibility that there could be a shake out in the USD short trade in the nearer term (2-3 weeks) before it could rematerialize with gusto through year end and into 2010.

Let us remember that the EURO makes up 57.6% of the USD-index with European currencies making up 77.3% (GBP:11.9%; SEK:4.2%:CHF:3.6%). Outside of this the JPY is 13.6% and the CAD 9.1%.

So the likelihood is that any major move in this will be predominately one of the Euro/European currencies versus the USD.

USD-index chart (daily)


76.4% pullback: The USD-Index has completed a near perfect 76.4% pullback of the move from the 2008 low to the 2009 high (On the log chart) with its recent low on the 16th November.

There is very well defined triple momentum divergence now in place following the marginal new low this week.

There is a large gap between the 55 day moving average (76.16) and the 200 day moving average (80.70- 7.2% away from where we are today). It has been below the 55 day moving average since April this year.